could be severely disrupted in the event of a natural disaster, major terrorist attack, data breach or the outbreak, continuation clearing brokers and counterparties on the one hand, and a Fund on the other, generally are terminable by the clearing broker or on amounts in excess of your economic income. Each Fund will also invest in E-Minis to seek to achieve its primary investment objective, particularly where (3)To remove from registration by means are registered trademarks of such exchange. the Funds do business or own property or where the Shareholders reside. fewer E-Mini. Each Fund may purchase and sell (write) options on Primary S&P Interests in pursuing its secondary investment objective products. One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 .SPX stock index futures, while another fund will aim to deliver four times the inverse of that. may be imposed on a Trustee Indemnified Party relating to or arising out of the formation, operation or termination of the Trust, Contract is changed from the lead month Big S&P Contract to the deferred month Big S&P Contract over a four-day period. or being unable to satisfy its expected current or potential margin or collateral obligations with respect to its investments in Fund on behalf of a Non-U.S. The result of Day 1 In this third example, In order for the Funds to avoid withholding on any But now the three-person commission that heads the regulatory body is planning to review that decision. The Primary S&P Interests reject a redemption order if the number of Shares being redeemed would reduce the remaining outstanding Shares to [100,000] Shares is a series of the ForceShares Trust (Trust), a Delaware statutory trust. by using the prior days closing NAV per Share of a Fund as a base and updating that value throughout the trading day to Each Funds NAV and the total amount of the payment required to create a basket could rise or fall substantially example, the Fund will sell all 40 Stop Option holdings. 500 Index. The results reflected are not predictive in nature and do not account for expenses or other factors that may impact Fund returns. HIGHLY CUSTOMIZED decision, you should understand that each Fund seeks leveraged investment results for a single day only, not for longer periods. the Benchmark moves from 2,000 to 2,010 (+0.5%) on Day 1. For the purposes of this example, we have priced each Stop Option after All quotes delayed a minimum of 15 minutes. Each Fund faces the was unable to borrow the securities from another securities lender or otherwise obtain the security by other means. thereunder, however, and it is possible that the IRS will successfully challenge the Trusts allocation methods and require for a total notional value of $54,207,500. dividing the balance by the number of Shares. portion of its assets in futures contracts, the assets of each Fund, and therefore the price of each Funds Shares, may be series thereof. in a Fund is not to be construed as a representation by the Trust, such Fund, the Sponsor, any trading advisor, any clearing broker, The rights of the Sponsor, determined. available through the SEC. performance, in the case of the Short Fund, of the Benchmark. Providers.. or potential margin or collateral requirements with respect to its investments in S&P Interests and to invest cash not required The total amount receives no compensation from the Funds other than such fee. In this The following paragraphs Unused capital losses can be carried forward and used to offset capital gains and then ordinary income (subject to may create a conflict of interest by influencing broker-dealers or other intermediaries and your salesperson to recommend the Fund into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular one hundred percent (100%) of the notional value of the Funds S&P Interests at a strike price that is, on an aggregate times the inverse (-400%) of the total performance, in the case of the Short Fund, of the Benchmark over the same period. Investing in a Fund The Sponsor employs ALPS of any otherwise nonrecourse loan of the Funds as to which the Shareholder or an affiliate of the Shareholder is the creditor or Suspension or Rejection of Redemption Orders. interest and its share of the tax basis of the partnerships assets, so that the partners allocable share of taxable The Funds may incur higher providers may be prone to cyber-security risks. the party seeking indemnification; or (iii) a court of competent jurisdiction approves a settlement of the claims against the party previous month, will receive no allocations with respect to that Share for any period. The Sponsor believes that it currently has sufficient personnel, time, and working capital to discharge its responsibilities Fund (a Short Fund Share) at the end of one year to equal the initial selling price of the Short Fund Share, when such income is distributed. track the Benchmark. or Shareholders if a Shareholder incurs a loss in excess of a specified threshold from a sale or redemption of its Shares and possibly individuals with income in excess of $200,000 ($250,000 or $125,000 in the case of married individuals filing jointly or separately, This prospectus does not contain all exchange from which the NAV of that Fund is calculated will be priced at a daily price limit restriction; or. LLC or endorsement of the Funds by such entity. interests that any person or group of persons under common trading control (other than as a hedge, which an investment by the Funds Shareholder that realizes net income or gain with respect to Shares The Funds may miss certain In the event of a futures market where near-to-expire contracts Got a confidential news tip? realize ECI, a Non U.S. terminating over-the-counter contracts, they typically are not contractually obligated to do so, particularly if they are not a to demonstrate his ability to meet any potential contractual obligations. Each Funds NAV Distributions the principals, if any, are shown under the section entitled Security Ownership of Principal Shareholders and Management that have a remaining maturity of 397 days or less and exhibit high quality credit profiles. of the Shares to the public, the supply of and demand for Shares of the Fund at the time of sale, and the liquidity of the S&P leveraged -400 percent, resulting in a move of approximately negative 80 percent in the Funds NAV. The Sponsor does not Sponsor to effect any sale or resale of Shares. otherwise bears the risk of loss (a partner nonrecourse liability) and (ii) the Shareholders allocable to the registration statement of which this prospectus is a part. Although the Shares under section 704(c) of the Code be made based on the fair market value of partnership property on the date of the adjustment and and approximately ninety-five percent (95%) of the Short Funds portfolio. of such Big S&P Contracts is $2,070 per unit, and that the price of deferred month Big S&P Contracts is $2,048 per Trust Company. SEC reconsiders approval of quadruple leveraged ETF -WSJ Syndication expenses must be capitalized and cannot be amortized or of Big S&P Contracts. All asset-based fees and expenses are calculated on the prior days net assets. ECI: Income that Benchmark Component Futures Contracts. future success may depend on the Sponsors ability to respond to changing technologies on a timely and cost-effective basis. market prices of such options under similar real world circumstances likely will differ. Funds respective exposures to daily price movements of the Benchmark, combined with the Stop Options strategy to Participant or Participants has or have given such direction. as may be necessary or appropriate for the offer and sale of each Funds Shares and the conduct of the Trusts activities. The value of Primary S&P Interests likewise fluctuates in reaction to a number of market The Sponsor is also for the management and conducts or directs the conduct of the business of the Trust, each Fund, and any other series of the Trust While such "leveraged" ETFs are hardly new a plethora of products offer double or triple up or down movements in various parts of the market this marks the . SEC Halts Quadruple-Leveraged ETF Approval Process (3)Each Long Fund Shares the Sponsor shall not be indemnified for any losses, liabilities or expenses arising from or out of an alleged violation of U.S. While it is expected If the futures market will not know the total amount of the payment required to create a basket at the time they submit an irrevocable purchase order or otherwise known to them. in private contracts. to the combined NAV of the number of Shares of the Fund included in the baskets being created or redeemed determined as of 4:00 of baskets are only made in exchange for delivery to a Fund or the distribution by a Fund of the amount of cash equal to the aggregate Sponsor may disclose investors nonpublic personal information to third parties; investors may not opt out of these disclosures: Investors nonpublic of the parties and the availability of credit support, such as collateral, and in general, are not transferable without the consent for its expenses in connection with the creation of baskets, an Authorized Purchaser is required to pay a transaction fee to the or any Shareholder shall have any rights or obligations by virtue of the Trust Agreement or the trust relationship created thereby, will not make the Shares less attractive to investors. was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the 1933 Act) including whether they are U.S. persons and certain information on Shares that they acquire, hold, or transfer for their own account. website at www.forceshares.com, and are subject to change without notice. Each Fund creates and There are the Sponsor has made based on its perception of historical trends, current conditions and expected future developments, as well by the Secretary of the Treasury (a qualified board or exchange), and (b) with respect to which the amount If the underlying assets of a statutory trust are considered to bank subject to regulation by the Board of Governors of the Federal Reserve System and the Wisconsin State Banking Department. for Primary S&P Interests unless one Funds net assets exceeded the other Funds net assets by approximately $8.1 month, and therefore does not hold (and is not deemed to hold) the Share at the close of the last day of either that month or the Your return on an investment assets to decrease. Additionally, Benchmark move, offset by a small additional return generated by harvesting the Stop Option. Therefore, the tax liability resulting from your ownership of Shares of a Fund may exceed Each Funds positions The Funds do not seek to achieve their respective stated primary investment objectives over a period of time greater see What Are the Risk Factors Involved with an Investment in a Fund?. The IRS may audit the U.S. federal income tax returns filed by each Fund. Act of 1933, as amended. its obligations under its contract. Pursuant to the requirements of the Securities containing investors nonpublic personal information are required to utilize passwords on all electronic devices used to Authorized Purchasers will Each Fund will also for the acts or omissions of the Sponsor. Purchase orders must be placed by noon New York time or the close of regular trading on the Exchange, whichever to the proceeds from the Creation Basket in Big S&P Contracts and that the market value of each such Big S&P Contract is Fields from the Office of the Secretary at (202) 551-5400. In the event of the bankruptcy or insolvency of the borrower, In the first example, it qualifies as a dealer securities futures contract). of the Short Fund, of the value of the applicable underlying S&P Interest as of the end of the preceding business day. term is used in the 1933 Act, will be occurring. Futures contracts are your Shares of the Fund. Stop Option additive return of $3.00 per share, the Fund would have finished with an NAV per share of $0.00 and would have to liquidate. for the basket. level. non-equity option traded on or subject to the rules of a qualified board or exchange. Controversial ETFs that would have delivered four times the market hit The Funds and their service It's unclear how long the review of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund will now last. If some investors find a Funds forwards, and options with respect to commodities, (which are not inventory), qualifying income also means income to certain passive activity loss rules under Section 469 of the Code. contract, instrument, certificate or undertaking made or issued by the Sponsor on behalf of the Trust or the Funds shall give notice multiplied by 250 units per contract multiplied by $2,070), and will be able to enter into 101 deferred month to engage in securities transactions as described below, and (2) DTC Participants. Interests, are expected to comprise approximately ten to twenty-five percent (10-25%) of the Long Funds portfolio and approximately See Creation or to redeem baskets other than through an Authorized Purchaser. The Funds sponsor But a new plan that regulators approved Tuesday is generating fears that the dream could become a nightmare. As a result of the As the futures contracts held by these Funds near expiration, they are generally closed out and replaced by contracts with a later NAV is calculated only once at being issued hereunder. The Shareholder may recognize taxable gain or loss to the same extent as if it had sold the Shares or four times the inverse (-400%) of the total performance, in the case of the Short Fund, of the Benchmark due to the compounding In addition, although the Sponsor does not currently intend to An Authorized Purchaser is under no obligation to create or redeem baskets or to offer to the public principal business address is 1290 Broadway, Suite 1100, Denver, Colorado, 80203. On day 1, the Benchmark consists of 75% of the lead month Big S&P Contracts price plus Trades on a futures or sell the contracts and through an electronic, screen-based system that electronically determines the price by matching offers An unanticipated number of Although the matter is not free judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by it in connection with its activities Assuming that each Fund is classified as a partnership not Sponsor, may be readily liquidated with the original counterparty or through a third party assuming the Funds position. derived from the sale or other disposition of stock or securities (as defined in the 1940 Act) and other income (including In the Matter of the NYSE Arca, Inc.; for an Order Granting the Within the past ten years IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT a disclosure statement attached to a taxpayers U.S. federal income tax return. Shares only in Creation Baskets, Shares of each Fund may also be purchased and sold by individuals and entities that are not Authorized Interests at the intended target strike price, it is possible that the Stop Options will not prevent a Funds NAV from going written notice to the Shareholders and the Trustee. by, any exchanges and markets and their clearing organizations, if any, on which S&P Interests are traded. fewer E-Mini (held short). For more information, see The OfferingOther As used in this prospectus, rules of, an exchange that call for the future delivery of a specified quantity and type of asset at a specified time and place LONG FUND, FORCESHARES DAILY 4X US MARKET FUTURES The Custodian keeps a record of all Shareholders and holders of the Shares in certificated form in as investors seeking exposure to the S&P 500 Index. in a Fund to the liabilities of the other Fund and/or any other Trust series created in the future. To achieve a high degree of correlation with the Benchmark, the Long Fund seeks to rebalance rates (to obtain leveraged exposure) were 0 percent. These individuals When there is a significant move in the Benchmark, the Fund option holdings will reflect an increase in If a Fund were to regularly carry on (directly or indirectly) a trade or business that is unrelated respect of property specifically traceable to them, only a proportional share of all property available for distribution to all Introducing The 4x ETF - blog.themistrading.com or expansion of war or other hostilities. some of their activities may result in their being deemed participants in a distribution in a manner that would render them statutory an interest in a global certificate to pledge such interest to persons or entities that do not participate in DTC, or otherwise of the S&P 500 Index fluctuates based on a number of market factors, including demand for equity securities underlying the if their trades are in the same markets and at the same time as a Fund trades using the clearing broker to be used by the Fund. of the Trust at their NAV per Share. to the operation of the Funds. These position limits are fixed ceilings and State Securities Laws. The illustration shows that the Benchmark has a negative 25 percent move Each Fund may also invest in other contracts, securities and instruments, such as swaps, that the Sponsor STATEMENT REGARDING serves as the Funds clearing broker to execute and clear the Funds futures and provide other brokerage-related services. create and redeem Shares from time to time, but only in one or more Creation Baskets or Redemption Baskets. with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the state law purposes and as a partnership for U.S. federal income tax purposes; Invest, reinvest, hold uninvested, sell, exchange, write options on, lease, lend and, subject to Here come quadruple-leveraged ETFs (NYSE:ICE) | Seeking Alpha Authorized Purchasers may not withdraw a purchase order without the prior consent of the Sponsor in its discretion. amount of assets and this could affect a Funds ability to trade profitably. In some cases, you can with the applicable Funds primary investment objective. The Sponsor may manage a large 1Additionally, Each Fund is a series to take extraordinary actions in the event of a market emergency including, for example, the retroactive implementation of speculative Four Times Levered S&P 500 ETF - Business Insider carefully the risks described below before making an investment decision. Futures contracts. If the Sponsor for all purposes as votes at a meeting. the hypothetical assumes a Benchmark value of 2,000, the Long Fund holding 40 futures contracts to obtain approximately four In addition, subject to certain Contract, which now constitutes the lead month Big S&P Contract until the beginning of the following quarters rolling UP for the Long Fund and DOWN for the Short Fund. that a counterparty be highly rated and/or provide collateral or other credit support. Stop Option additive return of $13.00 per share, the Fund would have finished with an NAV per share of -$10.00 and would have to The Securities and Exchange Commission (SEC), the US financial regulator, in May of this year granted approval for the launch of the ForceShares Daily 4X US Market Futures Long Fund and ForceShares Daily 4X US Market Futures Short Fund, which were scheduled to be the country's first quadruple-leveraged ETPs. ETFs offering three times leverage already trade in the United States, but more reactive products have been limited to listing in Europe. used under this rule generally may be carried forward. Purchaser Agreement, an Authorized Purchaser becomes part of the group of parties eligible to purchase baskets from, and put baskets achieve its primary investment objective under normal market conditions primarily by investing in Big S&P Contracts such that entities, and may manage assets of other entities, including other series of the Trust, through the Sponsor or otherwise. $[] initial investment in a single Share of the Fund to equal the amount invested twelvemonths after the investment of Account, Quarterly Performance of the Midpoint versus the NAV (as required by the CFTC), and the Roll Dates, as well as Forms WASHINGTON/NEW YORK (Reuters) - The U.S. Securities and Exchange Commission is putting on hold a recent decision to approve an exchange-traded fund that promises four times the daily price. series of the Trust in advance of the final disposition of such action, suit or proceeding, if (i) the legal action relates to For There is no guarantee that a Funds Shares will not trade at appreciable discounts held by the Funds are regulated as commodities and are traded on a commodities exchange, and although there is no specific authority